Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Timing of payment of foreign accrual tax.
Position: See response.
Reasons:Law.
TEI Conference 1996 Round Table
Question XV - Subsection 91(4)
Please confirm that under subsection 91(4) of the Act, where an amount has been included in income in year 1 under subsection 91(1) a deduction may be taken in year 1 in respect of foreign accrual tax related to year 1 that is paid subsequently in year 2.
Department's Response
It is not clear why the foreign accrual tax in respect of year 1 would not be paid until year 2. Certainly the tax would be deductible in year 2 since subsection 91(4) of the Act provides that the foreign accrual tax is deductible when paid provided it is paid within 5 years of the year in which the FAPI income to which it relates was incurred. The key requirement is that the foreign accrual tax must be paid. Accordingly, if the foreign accrual tax in respect of year 1 has been paid at the time of filing the returns for year 1 it would be accepted as a deduction in year 1.
Prepared by: Jane Stalker
Date: November 22, 1996
File: 963887
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